The 2024 New England Survey is an in-depth study of the finances of 44 mid-sized private colleges and universities in New England that are neither heavily endowed nor research-intensive. They are tuition-dependent schools that are the mainstream of higher education in the region. As a group, they serve 136,000 students. They employ 32,000 faculty and staff. And their combined budgets approach $7 billion.
The purpose of the Survey is to assess how vulnerable these schools might be financially to the declines in enrollment that have been predicted as a result of a shrinking population in the 18 to 24 age group and changes in the public's perception of the value of a college education in relation to its costs.
Schools are quite aware of all these trends. But many in academia dismiss the downside risks by noting that most of the schools that have closed in recent years have been either for-profit or small. The prevailing wisdom is that consolidation of academic programming and routine austerities will be enough to maintain the financial strength of most colleges and universities, even if enrollments decline over time by the predicted 10% to 15% for the industry as a whole.
But anecdotes and hopeful thinking do not correlate with the findings of this study. The industry is not particularly nimble and often reacts to changing circumstances only after the fact. Review the data and the methodology in the pages that follow. And reflect on what they suggest, which is that:
This critical segment of the industry is hurtling toward a liquidity crisis of epic proportions. And the longer schools wait to recognize and prepare for the likelihood that enrollments will decline, the greater the damage that will be done.
Even though endowments and equity in real estate make most quite wealthy in terms of total assets, a significant majority of the 44 schools in The 2024 New England Survey are “at-risk” in terms of the most basic building block of finance—cash and short term investments that can be converted to cash for operating purposes in short order. The two are commonly referred to as "Cash and Equivalents". But for purposes of this report, they will be referred to simply as "Cash".
The options available to use most of their wealth other than cash to pay for normal operating expenses are limited, and the austerities that might be required to stay above water in terms of normal cash flow when enrollments decline could be profoundly disruptive, particularly if schools wait to respond until a crisis is upon them. But there are things that can be done to mitigate potential impacts or even avoid adverse outcomes altogether if schools anticipate and prepare for possible declines in enrollment well in advance.
The purpose of this report is neither to predict closures nor to create alarm or panic, but to serve as an immediate call to action.
The principles of finance that are presented here are not complicated. They are something every stakeholder who takes the time to read this report and reflect on its content can and, given the significance of what the data are saying, must understand.
THE 2024 NEW ENGLAND SURVEY SITE ROADMAP
(Select content by using the Navigation Bar at the top of each page)
The Survey Sample
The Fallacy of the Budget and the Concept of Staying Power
The Fallacy of Credit Ratings
The Fallacy of Forbes "College Financial Grades"
The Fallacy of Net Asset Value
The Fallacy of Revenue Diversification
The Harsh Reality
The Principal Findings of The 2024 New England Survey
The West Coast Survey
The Economics of Phased Downsizing
The Economics of a Merger
In Closing - Including Selected Resources
Comparative Statistics
The Principal Investigator
